National Group Files Suit Over Diversion of Funds from Ill. Auto Theft Program

In an effort to stop Illinois state government from illegally taking millions of dollars designated to fight auto theft, the Property Casualty Insurers Association of America (PCI) filed suit today in the state’s Seventh Judicial Circuit Court challenging the constitutionality of this transfer of money to the state general revenue fund and other state funds.

Gov. Rod Blagojevich and other top state officials are named in the suit that requests the court to declare that governmental actions authorizing the removal of money from the Motor Vehicle Theft Prevention Trust Fund and transferring the dollars to the state general revenue fund and other state funds violated the Illinois and United States constitutions. PCI is requesting that transferred money be returned to the trust fund and that future diversion of funds be prohibited.

The General Assembly established the Illinois Motor Vehicle Theft Prevention Council in 1991 to combat and reduce auto theft in the state. Since the creation of the council, $1 from each private passenger insurance policy sold in Illinois has been sent to the Motor Vehicle Theft Prevention Trust Fund to pay for auto theft prevention programs. The suit challenges the constitutionality of the transfer of over $7 million from the trust during fiscal years 2003, 2004, 2006 and 2007.

“The money provided to the Illinois Motor Vehicle Theft Prevention Trust Fund was earmarked for the sole purpose of fighting auto theft,” said Joseph Annotti, senior vice president, public affairs, for PCI. “Despite the statutory limitations on the use of the fund, state government used the money for other programs and services. The act creating the trust fund makes it clear that the money deposited should not be considered general revenue of the state. While we realize Illinois, like many other states, has faced economic challenges over the past few years, it is illegal to use these designated funds to address shortfalls in revenue. This inappropriate use of the fund hurts Illinois consumers by weakening the effort to prevent auto theft. In addition, diverting funds in this manner levies a hidden tax on all motorists.”

PCI identifies itself as a property casualty insurance trade association with 1,000 member companies, representing the broadest cross-section of insurers of any national trade association. PCI members write over $184 billion in annual premium, 40.7 percent of the nation’s property/casualty insurance. Member companies write 50.8 percent of the U.S. automobile insurance market.

Source: Property Casualty Insurers Association of America